Wipro Q3 profit falls 2.2 per cent to ₹2,456 crore
In a seasonally weak quarter Wipro posted consolidated net profit of ₹2,463 crore, down 3.8 per cent quarter-on-quarter, due to a rise in employee costs during the quarter ended December 31, 2019. The rise in employee costs was due to the company’s employee strength rising by 5,865 to 1,87,318 during the quarter. Wipro hired 1,891 freshers for its IT services segment during the quarter.
The profits were also hemmed in as other expenses almost doubled to ₹226 crore during the quarter and by a fall in utilisation of employees during the quarter to 79.6 per cent from 82.1 per cent. The fall in utilisation is because the quarter ending December 2019 sees employees taking furloughs. Employee attrition came in at 15.7 per cent, a level not seen in the last seven quarters.
IT Services’ operating margins were flat as a result at 18.4 per cent during the quarter (vs 18.1 per cent).
Decent revenue growth
Despite the shrinking profits, Wipro revenues from most its service lines, geographies and business verticals, grew during the quarter. The company posted consolidated revenues of ₹15,470.5 crore in the quarter ended December 31, 219, up 2.3 per cent compared to the previous quarter.
The IT services segment, which makes up nearly 97 per cent of its revenue, rose 3 per cent q-o-q to ₹15,101 crore. Revenues from IT products and State-run enterprises segments shrunk during the quarter. In constant currency terms, IT services revenue rose 1.8 per cent during the quarter.
The company’s IT services revenues in dollar terms came in at $2.095 billion. It managed to meet its revenue guidance for the quarter of $2.065 billion-$ 2.106 billion. It has guided for quarterly revenues of $2.095 billion- $ 2.137 billion.
Verticals, business units
After tepid growth in the first two quarters of financial year 2019-20, Wipro managed to post decent revenue growth in almost all of its verticals, business units and geographies. Except for its technology business unit, which saw revenues shrink by 3.7 per cent sequentially, all other business units posted positive growth. The technology business unit had posted positive sequential revenue growth in the first two quarters of FY20.
Its mainstay BFSI (31 per cent of revenues) grew 1.1 per cent q-o-q after posting two consecutive quarters of negative sequential growth. The acquisition of Vara Infotech completed in Q2FY20, which provides services to ICICI Bank, pushed up the revenue growth for Wipro.
All geographies posted positive growth in revenues. Despite some weakness seen in Europe in the previous couple of quarters, revenue grew 3 per cent, while Americas posted revenue growth of 1.5 per cent.